Selling Shared Ownership

gazfocus

JonnyNewBuild wrote: »

Was the original valuation of £170k not from an independent valuation?

I'm in a shareed ownership flat that was originally listed as £265k but under the terms of the scheme everyone buys or sells at an independent valuation which meant we eventually purchased 40% of £220k. Did his scheme not work the same way?

How did you manage to get the price down? (if you don't mind me asking). We're looking at buying 25% of a new build house that's up at £150k which does seem overpriced compared to the second hand 'full price' properties on the same estate

HappyMJ

gazfocus wrote: »

Could it not also work the other way round (i.e. if the house is worth less now, your brother could buy more shares in the property for a lower price)

It does work like that but few people have the resources to staircase to 100% and then sell and there is usually an amount of time the property has to be kept after staircasing before selling.

Shared ownership can be good but it is a long term investment. 3 years is not long enough.

gazfocus

HappyMJ wrote: »

It does work like that but few people have the resources to staircase to 100% and then sell and there is usually an amount of time the property has to be kept after staircasing before selling.

Shared ownership can be good but it is a long term investment. 3 years is not long enough.

Yeah, I thought that was the case. We're looking for a home we'll stay in for 10 years minimum.

PasturesNew

gazfocus wrote: »

Could it not also work the other way round (i.e. if the house is worth less now, your brother could buy more shares in the property for a lower price)

Can't do that if he's in NE... in fact he couldn't even get the current mortgage he has on that property.

nate_dog

poppy10 wrote: »

The point is, if it wasn't a shared ownership property, the housebuilder wouldn't have been able to get away with the blatantly ridiculous overvaluation that they pulled off with the SO deal. If it had been on the open market, the OP would have been paying 100% of a much lower purchase price, rather than 35% of an artificially inflated price.

SO schemes exist only to prop up failing housebuilders by allowing them to mark up properties that they would otherwise have to drop the price to sell.

I'm sorry but i woud disagree with this based on my experience. I must admit i have a vested interest in SO as i own one! we paid 40% of 140,000 purchase price when others on the development paid between 175,000 right up to one that went for 225,000 :eek: for 100% of the similar properties.

I believe now, 2 years later, that it is still worth about the same judging by what other similar 2nd hand properties are on the market for (150k-165k) and new ones are now being sold at 167,500 to 175,000.

Anyone failing to negotiate with a developer and using their recomended solicitor etc will pay over the odds whether they buy 100% of the property or go through a SO deal.

gazfocus

nate_dog wrote: »

Anyone failing to negotiate with a developer and using their recomended solicitor etc will pay over the odds whether they buy 100% of the property or go through a SO deal.

This is something that interests me really. As I've stated above, we're looking at buying a shared ownership property (a 25% share of a £150k huose) but we've read that there's no point trying to negotiate the price of a new build shared ownership. Is that right?

The house we're looking to buy is a new build but being sold through an estate agency rather than the developer.

JonnyNewBuild

gazfocus wrote: »

How did you manage to get the price down? (if you don't mind me asking). We're looking at buying 25% of a new build house that's up at £150k which does seem overpriced compared to the second hand 'full price' properties on the same estate

That's the rules of the scheme. Having the property indendently valued every time it is bought or sold, or every time you want to staircase prevents the developers from ripping you off with their orginal prices. It also means that the property will always fall into the 'affordable housing' bracket. I think it's a very fair method. No one bumped the price up when we bought and similarly we can't bump the price up when we sell. The original price of £265k is the guide price that was given in the developers brochure.

gazfocus

JonnyNewBuild wrote: »

That's the rules of the scheme. Having the property indendently valued every time it is bought or sold, or every time you want to staircase prevents the developers from ripping you off with their orginal prices. It also means that the property will always fall into the 'affordable housing' bracket. I think it's a very fair method. No one bumped the price up when we bought and similarly we can't bump the price up when we sell. The original price of £265k is the guide price that was given in the developers brochure.

Thanks, that's definately something we'll discuss with the estate agents. So it's the mortgage providers valuation that the house is sold at? Thanks again

MarkyMarkD

brit1234 wrote: »

Sorry you are clearly wrong, have you missed the last decade perhaps:

1. Irresponsible lending
2. Unsustainable house price growth
3. Stupid schemes to allow prices even higher
4. Pop
5. Credit crunch
6. falling prices
7. tighter lending

There is clear evidence that shared ownership bumps up the price just look on right move for mixed developments and compare prices. I have witnessed personally developers inflate property prices when shared equity appeared.

What was all that gift deposit fiasco if not surveyors overvaluing.

People say it is supply and demand that regulate prices when it is actually supply of credit instead. Shared ownership is simple a way for people to borrow more and push up prices.

Luckily most lenders have abandoned shared ownership due to over valuations and other issuses.

Its a scam

Did you not read what I said? Lenders are no more likely to accept an over-valuation on a shared ownership property than any other new build property.

None of what you have said is exclusive to shared ownership.

You are also confusing shared ownership and shared equity. With shared ownership, the housing association is buying the property and effectively re-selling a lease on a share of the property to the purchaser of the share. There is no scope there for a developer to over-charge, because the HA is not going to pay over-the-odds when they are buying typically 25%-75% of the property themselves.

With shared equity, where the developer is keeping the remaining share, there is far more obviously an incentive for the developer to increase the price - and they can do so, because of affordability which is easier (as they generally effectively subsidise the remaining part's rent). But the constraint on them doing so is the independent valuation, on behalf of the lender. If the valuer was prone to over-valuing, that's an issue which is the responsibility of the valuer not the lender.

brit1234

MarkyMarkD wrote: »

You are also confusing shared ownership and shared equity.

Please don't tell me what I am thinking. I'm not confusing SO with SE as I mean SO. Both are scams but I am talking about shared ownership in this case.

Shared Ownership is a scam, avoid at all costs. At least the government has stopped funding this failed scheme despite the winging of the housing federation.